Growth in business is the natural development of a company, often associated with higher revenue in the form of more customers, and increased profits. Growth is the primary ambition of many investors, entrepreneurs and employees. It’s not without challenges.
Organic and inorganic business growth is both possible. Growth that is organic occurs naturally within the company, while inorganic growth is achieved through mergers and acquisitions. Other ways to expand an organization include diversifying products and services, or increasing production capacity.
Economies of scale can help businesses reduce their costs through the production of larger volumes of goods or services, which lowers the cost per product. The diseconomies of scale could be experienced when a company expands to an unsustainable level, leading to excessive spending or economic downturns.
A company experiencing rapid growth faces a variety of issues, from expanding to new locations and bringing on more employees to managing the increased profits. Effectively achieving business growth requires an organization to improve its management methods by using tools such as budgets, strategic planning and management by objectives. In addition, the company must be able to maintain its entrepreneurial spirit when it grows.
As a business grows, it will often diversify its product offerings which is beneficial for its long-term growth. A bakery that opens the restaurant on its premises, for example is able to safeguard itself from a decline of the bakery business by taking care to balance losses in one sector with profits in a different.
